How maqasid al-shariah related to finance and banking. Maqasid comes from an Arab plural word which is “maqsad”, the root word is “qasd” which mean of intuition, aim or objective in an actions. Maqasid al-shariah is referring to the goal or objective to be achieved in an Islamic law. There are five main purposes of maqasid al-shariah there are; to preserve religion, to preserve life, to preserve wealth, to preserve intellectual and to preserve lineage. Maqasid al-shariah is one of the important guidance for people and it should be considered for improvement in financial system.
Besides the Shariah rules and regulations, Maqasid al-shariah represent the most comprehensive instrument that can enhance the capability in finance and banking today, furthermore it give the guideline for people in managing and preserve the wealth complies with the shariah of Islam. Nowadays, there are many of Islamic banking and financial institutions are established based on Shariah for example is Kuwait Finance House, Bank Islam Malaysia Berhad, Bahrain Islamic Investment Company and etc. his is because of the demand and the acceptance of legitimate financial institution. Many of Muslim people wants the financial products are based on the principles of Shariah. The system of Shariah and Islamic law is comprehensive to be practices in economic development and Islamic countries. The concepts of Islamic banking is not only includes the prohibition of Riba (interest) but it is includes in aspects of morality and equality of transactions.
Islamic banking in the modern era, generally aim to promote and develop the application of Islamic principles, law and tradition to transaction of financial, banking and related business activity. The conventional banking is very different between Islamic banking; this is because of conventional only focuses on the profits itself and to maximizes the wealth of their shareholder. This is contrast between Islamic banking, which is to ensure the well being and welfare of the people especially in socio-economic matters of Muslim.
Islamic banking is likes conventional banks which are profitable organizations, their objective is to gain profit but they are not allowed to deal with interest (riba) or any business activities that prohibited in Islam. We can see that Islamic financial system is to develop the principles of justice to all parties, irrespective of race and religion. Furthermore, there is no cruelty element against by any party including non-Muslims and all parties have equal rights.
Maqasid al-shariah should be taken and practice as a guideline in all type of financial transactions. The importance of Maqasid al-shariah in developing Islamic finance products comes from the wealth itself, the objective of Islamic law in finance and banking and to the overall goals of Shariah which is to protect and preserve of wealth. For example, we can see that in Islamic banking is not practicing of riba (interest) which is clearly that is prohibited in Islam and will harm other people.
The main reason why riba is prohibited in Islam because this system is unfair and there is the exploitations elements in it. The prohibition of Riba in Islam has stated in Qur’an which is, The Qur’an says “but God has permitted the sale and forbidden the riba;” (2:275) and “God destroys/eliminates the Riba;” (2:276). Maqasid al-shariah is includes many aspects in terms of benefits, public interest, private interest and protections from various types of harm and vices. So maqasid al-shariah aims to protect the interest mankind and keep people from evil.
The objective of Maqasid al-shariah in finance and banking are to preserve of harm and hardship in wealth and finance as well as to ensuring transparency and justice in circulation of wealth. Maqasid al-shariah is works as guideline to ensure the needs, wants and the aspiration are met and protected. Allah has written His laws in order to provide benefits to human and to prevent any damage from them. In this context, the main principles of Shariah must not be overlooked or taking for granted because the goal is objective and practical to ensure the interest of people, religion, property, life and descendants mankind.